CapitaLand Ascott Trust (CLAS) has recently expanded its portfolio in Japan with the acquisition of two limited-service hotels for a total of JPY21 billion ($178.5 million). The two hotels, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, were acquired at a discounted price of 8.3% based on independent valuations.
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The acquisition is expected to have a positive impact on the trust’s performance, with a projected distribution per stapled security (DPS) accretion of 1.6% on a pro forma basis for FY2024. The blended net operating income (NOI) yield for the two hotels is estimated to be 4.3% in FY2024. The trust has also adopted a natural hedge against currency fluctuations by funding the acquisition with JPY-denominated debt and proceeds from the divestment of four properties in Japan.
The first of the two hotels, ibis Styles Tokyo Ginza, is located in the heart of the city’s popular shopping and entertainment district. The 224-unit hotel is situated next to Ginza Six, a high-end retail mall, and the well-known Uniqlo flagship store. It is also within walking distance to the iconic Ginza Wako clock tower.
The second hotel, Chisun Budget Kanazawa Ekimae, has 392 units and is located in Kanazawa, a city known for its historical attractions, beautifully landscaped gardens, and cultural sites. Guests can easily access popular tourist spots such as the Kanazawa Castle, Kenrokuen Garden, and heritage districts featuring architecture from the Edo period.
CLAS has been actively investing in overseas properties, including the recent acquisitions of Teriha Ocean Stage in Fukuoka and Standard at Columbia in the United States. In December 2024, the trust also completed the acquisition of lyf Funan Singapore. These investments, along with their divestments in 2024, have resulted in a net gain of about $74 million.
Serena Teo, CEO of CLAS’ manager, explains that the acquisition is part of their portfolio reconstitution strategy to enhance the quality of their portfolio and provide stable returns to investors. She also notes that the projected FY2024 NOI yield of the two hotels is significantly higher than the blended exit yield of their previous divestments in Japan, indicating a positive shift in their portfolio.
CLAS closed at 90 cents per unit, reflecting investors’ confidence in the trust’s continued growth and performance.